Obama's got Clinton's financial back

December 5, 2008 8:35:54 AM PST

By BETH FOUHY

NEW YORK (AP) - December 5, 2008 --

President-elect Barack Obama wants to keep an outstanding commitment before Hillary Rodham Clinton becomes his secretary of state by calling on his donors to help her reduce her massive campaign debt before federal ethics rules prohibit her from doing so. The urgency is rooted in the size of the New York senator's unpaid bills and the fundraising restrictions she will face once she joins Obama's cabinet.

At the beginning of November, Hillary Clinton owed $7.5 million to vendors from her failed presidential bid, according to campaign finance records. The largest share of the debt - about $5.3 million - is owed to the polling firm of Mark Penn, the Clintons' longtime political strategist. She owes hundreds of thousands of dollars for printing, equipment rental, phone banks and other services.

Clinton has slowly been trimming the debt since suspending her campaign last June, partly with Barack Obama's help. But her fundraising efforts will be curtailed if she is confirmed as secretary of state and becomes covered by the Hatch Act, which regulates political involvement by federal employees.

A 2001 advisory opinion by the federal Office of Special Counsel said a federal employee with a campaign debt would be prohibited from "personally soliciting, accepting or receiving political contributions." That means Clinton's political committee could keep raising money to pay off her creditors, but without her direct involvement.

The lack of access to Clinton could pose a disincentive for donors, said Sheila Krumholz, director of the Center for Responsive Politics, which tracks political donations.

"People write a check to get into the room with a candidate or government official. If she's legally barred from fundraising, the No. 1 reason for giving has been removed," Krumholz said. "It's like attending a wedding and the bride isn't there."

The advisory opinion does allow the former candidate to appear briefly at fundraising events and thank donors. That restriction could suit Clinton well, according to some of her top bundlers who say neither she nor her husband has ever been good at asking for donations.

But none of the Hatch Act rules apply until Clinton is confirmed, so there's an opportunity for people eager to get some face time with the incoming secretary of state. Aides said she will try to avoid doing anything that suggests she is leveraging her new post for fundraising advantage.

Obama's team was sending an e-mail early Friday, signed by Vice President-elect Joe Biden, asking them for help retiring Clinton's debt as she prepares for her new duties.

The letter asks for help honoring "an outstanding commitment we made during the election."

Our campaign pledged to help Senator Hillary Clinton - one of the vital members of our team and our future Secretary of State - retire her campaign debt. That's the money her campaign owes to the small vendors across the country that make our political process possible.

"We welcome Hillary as a partner in our administration, and I hope you will show your support by helping Barack fulfill our campaign promise," the letter said.

Clinton and her husband, former President Bill Clinton, will headline a major debt retirement event in New York Dec. 15 with "Ugly Betty" star America Ferrera as master of ceremonies. Tickets range from $50 to $1,000, with top donors earning a premium seat and a backstage photo with the former first lady.

Clinton also plans to sell a children's book, titled "Dreams Taking Flight" by author Kathleen Krull, about her pioneering candidacy. Clinton's mother, Dorothy Rodham, planned to send an e-mail to supporters later this week asking them to purchase the book to help raise funds to pay down Clinton's debt.

On Tuesday, a day after Obama announced she would serve as his top diplomat, Bill Clinton signed an e-mail to supporters asking them to send a note of congratulations to his wife and including a link for contributing to her debt retirement.

Analysts said that fundraising to retire a politician's debt - never easy - is more difficult during the recession. Also, Clinton is trying to pay off debts from the Democratic primaries, where many of her supporters already gave the maximum $2,300 per person. They cannot be solicited again.

The large share of her debt owed to Penn, a controversial figure and harsh Obama critic, also complicates matters for Clinton. Many Democrats blamed him for her strategic failings.

Clinton also has about $6 million in her Senate re-election account; some of that could be used under strict restrictions to help pay these debts. Under FEC rules, she would need to ask each contributor's permission to move the donation to her debt retirement account - and none could come from people who already contributed the maximum to her presidential bid.